Doctrine - Codex-online

The case concerns the applicant company's complaint that it was targeted by the Russian authorities with tax and enforcement proceedings, which eventually led to its liquidation.

The applicant company, OAO Neftyanaya kompaniya YUKOS, was a publicly-traded private open joint-stock company incorporated under the laws of Russia and registered in Nefteyugansk. It was established by the Russian Government in 1993 as a holding company to acquire and control a number of stand-alone entities specialised in oil production. The company was fully State-owned until the mid-1990s when, through a series of tenders and auctions, it was privatised.

Starting in late 2002, the company was the subject of a series of tax audits and tax proceedings as a result of which it was found guilty of repeated tax fraud, in particular for having used an illegal tax evasion scheme in 2000-2003. It was then ordered to pay additional taxes, default interest and penalties, which were later increased by the imposition of enforcement fees. The tax and enforcement proceedings resulted in the forced auction of OAO Yuganskneftegaz, the company’s most valuable subsidiary. The applicant company was declared insolvent on 4 August 2006 and liquidated on 12 November 2007.

The application was lodged with the Court on 23 April 2004 and was declared partly admissible on 29 January 2009.

Relying on Article 6 (right to a fair hearing) of the European Convention on Human Rights, the applicant company complains of irregularities in the proceedings concerning its tax liability for the 2000 tax year. Under Article 1 of Protocol No. 1 (protection of property) to the Convention, taken alone and in conjunction with Articles 1 (obligation to respect human rights), 13 (right to an effective remedy), 14 (prohibition of discrimination) and 18 (limitation on use of restrictions on rights), it complains about the unlawfulness and proportionality of the 2000-2003 tax assessments and their subsequent enforcement, including the forced sale of OAO Yuganskneftegaz. Lastly, relying on Article 7 (no punishment without law), it alleges that the proceedings for payment of the taxes due for the years 2000-2003 lacked a proper legal basis and resulted in selective and arbitrary prosecutions and in imposition of a double punishment. Under Article 41 (just satisfaction), Mr Piers Gardner submitted a claim for damages amounting to over USD 98 billion.